Getting rid of Ten’s plans to spend $20 million on new news programs from 6-7pm has been mentioned as a possible Packer plan in the media this morning after confirmation last night that Packer’s private company Consolidated Press Holdings Ltd was behind yesterday’s share raid. The news strategy is a big risk for Ten, possibly the biggest we have seen in free-to-air TV programming for years.

But with all risks, there’s a big potential loss, but also a pay-off.

Just after noon, Ten confirmed earlier guidance of a sharp improvement in revenues, especially from TV, earnings and the resumption of dividends to shareholders with the payment of a 6 cent a share unfranked final and a special 5 cent a share payment after a surprise tax refund.

Ten said group revenue rose 10% to $991.5 million from 200.9’s $902.5 million; group earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 38% to $208.1 million (2009: $151.0 million); TV EBITDA was up 37% to $194.2 million (2009: $142.1 million), Reported Group net profit after tax was $150.0 million, and Underlying Group net profit after tax was up 105% to $96.9 million (2009: $47.2 million).

The company said it now expects to pay about 65% of profits out as dividends, compared to the previous policy of 100% that was abandoned when the GFC hit. The timing of the tax refund will mean that only one dividend will be paid in 2011 and that will be a final to be paid in December of next year. The company will then revert to interim and final payments.

And if Ten gets the pay-off, there have to be losers elsewhere in FTA TV. And who would that be? Why rivals Nine and Seven. James Packer has never, ever understood that making TV involves risk. It is doubtful, for example, whether he would have seen the upside in MasterChef Australia last year as it was a flop in its UK form on pay TV in this country and a so-so performer in the UK.

But who is pushing the idea of ending Ten’s news experiment? Yes, the Packer camp it seems, but Seven and Nine were helping it along yesterday because of the enormous benefit if Packer forces Ten to drop the idea.

Why? Because the vital 6pm news and 6.30pm current affairs programs on Nine and Seven are most at risk from Ten’s plans for the two new programs. Ten will shift Neighbours and The Simpsons to its new digital channel, Eleven, from early next year and they will be replaced by the two new news programs. For Seven and Nine, the hour of news and current affairs between 6-7pm not only are among the most profitable hours of TV, but also vital for programming and ratings success every night.

Winning or doing very well from 6-7pm sets up Nine and Ten for the rest of the night. Since Seven started getting its act together in this vital hour, it has moved to market leadership in this timeslot and in the ratings and in the share of TV ad revenues. These are not co-incidental.

Ten’s thinking is that the 16 to 39s who watch The Simpsons and Neighbours will mostly go to Eleven, giving it about 300,000 viewers when both programs are being broadcast. Repeats of Glee and a host of other 16-39 skewing programs will also go to Eleven.

Ten hopes to match its audience shares from 6-7pm from The Simpsons and Neighbours with its two new news programs: that’s about a 17%-20% share. Doesn’t seem much, it’s roughly 400,000-600,000 viewers Monday to Friday and about 400,000 on weekends.

Those viewers are going to have to come from Nine and Seven’s news and current programs between 6-7pm. The ABC, SBS and the digital channels don’t have that number, nor does pay TV. If Ten succeeds, Seven and Nine could lose hundreds of thousands of viewers between them, which would in turn see ad ratings, audiences and ad revenues fall sharply, not only in that hour, but through the rest of the main ratings period up to 10.30pm.

Nine and Seven know they will have to spend a lot of money fighting Ten next year to keep those viewers. Extra money will have to be spent on sets, reporters, stories, promotions (such as the silly $100,000 giveaways that Nine has been running in Melbourne this week), and on new programs after the news to try and win back viewers from Ten later in the evening. Nine and Seven, being almost half owned by private equity, have slashed programming costs by running more repeats and by programming movies on Fridays and Saturday nights out of the NRL and AFL seasons. These movies are cheap, requiring little in the way of added costs or staffing on the night or to make.

In fact there are now only four nights of real ratings competition each week out of football season, Sunday through Wednesday, with Thursday very much a second-tier night, and Friday and Saturday programming wastelands. Ten has followed suit.

With James Packer lumbering into the Ten share register and enlightening us (via the compliant media) with his TV expertise, Seven and Nine have found a potential answer to the problem posed by Ten’s two new programs: Get James Packer to force Ten management to drop them, and save the two rivals millions.

But one of the silliest theories, and totally unexplained ideas today was the one suggesting that Packer would force Ten to close its ONE sports channels and retransmit Sky News on Ten’s ONE digital channel. That would see retransmit fees flow to Seven and Nine, which control 66% of Sky News and would be delighted to take money from a free-to-air rival, and weaken it into the bargain.

That idea was peddled by, among others, Elizabeth Knight in the Sydney Morning Herald:

“James Packer’s $270 million raid on the Ten Network is part of a wide-ranging plan that, if successful, would have Rupert Murdoch’s Sky News broadcast on one of Ten’s high-definition services – replacing its dedicated sports channel, One. Axing Ten’s sports channel would get rid of a big competitor for Fox Sports, jointly owned by Rupert Murdoch’s News Ltd and Packer. Until now Sky News has been available only on the pay television outlets Foxtel and its regional equivalent, Austar. Under Packer’s plan, Sky News would still be screened by Foxtel but would use one of Ten’s digital channels as another distribution point and reach a far bigger audience. And just as importantly for Murdoch it would give him a presence in free-to-air television — and some would argue an opportunity to voice his political agendas on a more mainstream broadcast media.”

She doesn’t look at TV ratings figures. If she did, she would find that the current FTA news channel, the ABC’s News 24 is beaten most days and nights by ONE. In other words, retransmitting Sky News would split the market, and result in lower ratings and audience figures. But re-transmitting Sky (which was an idea for Nine News in the dying days of the Packer reign, which continued into the early months of CVC’s reign) News would also cut the audience for Sky on pay TV.

Removing the sport from ONE would, as Knight points out, “get rid of a big competitor for Fox Sports”. But if its a “big competitor for Fox Sports”, it must be successful, so why replace it? And what would the ACCC say when Packer is merely a shareholder in Ten and pressuring it to aid one of his other investments, the 50% of PMG (which houses Fox Sports channels) and the 25% of Foxtel? And indirect shareholder in Fox Sports, via 25% of Cons Media,(which owns 50%) is no other than Kerry Stokes and his group.

So Packer and Stokes would have a vested interest in closing down the free-to-air competitor to Fox Sports (of which they control half) and re-transmitting Sky News (and rewarding Seven with more money). Not one of the “well informed” or other sources briefing the media mentioned that benefit from this whizz.

Meanwhile, none of the print writers have made the point that the advent of the digital channels (on top of weaker consumer demand generally) has forced Foxtel to recast its market offer completely. First it was free installation and then a month off, now its free installation, a free PVR for a year, free movies for a month and the first three months of the now 12-month subscription contract free. The halving in the length of Foxtel’s standard subscription contract is the best sign of the pressure the pay TV business now finds itself under. That 24-month contact used to be set in stone, but no longer. Foxtel’s subscriptions have slowed dramatically.

And, by the way, insofar as the AFL TV rights are concerned, Ten can’t bid independent of Seven and link  with Foxtel, for the AFL, as some of the reports suggested this morning. Ten is contractually bound to bid with Seven for the AFL rights. Where Ten can link up with Foxtel is the NRL rights and bid against Nine. Now Kerry Stokes (which would like the NRL), would have no objection to that, seeing Nine wants the NRL at all costs. In the end Nine will join with Foxtel and bid for the NRL, again and underpay relative to the AFL

But hold on, that would make Ten a more costly operator, so where’s the logic in that if he, as claimed by some of his more adoring fans this morning, wants Ten to go back to its roots as a cheap, low cost 16-39 skewing TV channel?

Finally, not one media or business writer was game enough to question the morality of a gambling billionaire controlling a TV channel, as James Packer and his family did before the stuff up at Nine. When they controlled Nine, the network did not chase down gambling stories and do any exposes on the ills poker machines and casinos (and wagering) bring to families and individuals.

And finally, if Nick Falloon is given the boot from Ten, any bets on him becoming either executive chairman or non-executive chair of PBL Media? CVC is looking for directors.